Have you ever been faced with a non-refundable deposit that you wanted to get back?

I’m sure we have all heard the term ‘non-refundable deposit’ before. Businesses can ask for a non-refundable deposit prior to customers making a purchase. On face value, this means that once you have made a payment you can’t get your money back after a certain amount of time has elapsed or you will have to go through a cancellation process, which can include a fee.

However, in some cases, your non-refundable deposit can actually be a refundable deposit. Why is this? The Competition and Markets Authority (CMA) says that non-refundable deposits are only meant to be a small percentage of the total fee. This means if you have paid a large deposit you could be entitled to a refund.

The following is taken from www.gov.uk

Are you a consumer who has:

  • Agreed to buy goods or services, but changed your mind or are unable to go ahead with the contract?
  • Been asked to pay a cancellation charge to the business, but want to challenge the amount?
  • Lost your deposit or advance payments, and want to get them back from the business?

The business may be asking for more money than it is entitled to. Just because it’s in the contract doesn’t mean it’s always legally binding. Businesses cannot rely on unfair terms.

Consumer law says:

  • Don’t just accept the business can keep your deposit and advance payments or ask you to pay a cancellation charge if you cancel the contract. The business can only do this if the contract term is fair.
  • A cancellation charge is not fair just because it’s in the contract you signed – it needs to be reasonable.
  • Sometimes you’re entitled to a full or partial refund – but you can’t always expect all of your money back if you change your mind.

Businesses can keep your deposit or advance payments, or ask you to pay a cancellation charge, only in certain circumstances:

  • If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their actual losses that directly result from your cancellation (e.g. costs already incurred or loss of profit).
  • Businesses must take reasonable steps to reduce their losses (e.g. by re-selling the goods or services).
  • Non-refundable deposits should only be a small percentage of the total price.
  • Cancellation charges must be a genuine estimate of the business’ direct loss.

Contact the business

If you have concerns, firstly ask the business to explain how they calculated the amount they are keeping or charging you for cancelling the contract.

For further information or advice

Contact the Citizens Advice consumer service (03454 04 05 06) for advice on what you can do.